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Financial Crisis_2008_2

The New York Times headline from October 20, 1987, proclaiming the disastrous trading on the New York Stock Exchange the preceding day, an event which has come to be known as Black Monday.

I was talking to my stockbroker today and I said, “Waiter!”

– Jay Leno, October 1987

Jay Leno’s opening joke on the Tonight Show got a huge laugh from the audience, and with good reason.

That may sound a bit odd, but you need to consider the context. You see, his wisecrack came within days of the Monday, October 19, 1987 stock market crash, an event that has come be known as Black Monday.

On that fateful day, the Dow had dropped over 22%, a record one day percentage plunge exceeding even the big one-day percentage plunges that marked the 1929 stock market crash, and people were in the mood for some good comic relief.

To give a sense of what people were thinking at the time, TheStreet ran an article last year marking the 30th anniversary of Black Monday. In his piece, author Michael Brown noted, “Many thought the crash was the start of the next Great Depression and the headlines of the day reflect it.”

As it turned out, no Great Depression ensued. In fact, things got back to normal pretty quickly. Today, Black Monday is considered something of a one-off oddity. An interesting piece of investing trivia to be sure, but not something terribly relevant for today.

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“I just lost $30,000,” replied the shaken caller after a long pause.

It was the fall of 2008, and I had just started work for a large financial services firm as a 401(k) telephone representative. Little did I know when I took the job a few months earlier that the US, and much of the Western, world, was on the cusp of what many would come to view as the worst financial crisis since the Great Depression of the 1930’s.

The Dow and S&P both were selling off hard, day after day, week after week. People were scared.

Many of the panicked calls that I took were people who wanted to know what the balance of their 401(k) account. In some ways, this struck me as a bit odd. After all, it was 2008 and the internet had established itself as a staple of American life over a decade earlier. “Why don’t these people just go online?,” I wondered to myself.

In retrospect, perhaps one reason people called was that, rather than just watch as the computer screen displayed years of hard won retirement savings evaporate as the morning dew, they just wanted to talk to someone. That’s certainly understandable.

Ten years on, much of the American public thinks of the 2008 crisis, if they think about it at all, as a ancient history. Just last week, the Dow hit a new record high and seems to be headed higher still.

President Trump tweeted out back in June, “In many ways this is the greatest economy in the HISTORY of America and the best time EVER to look for a job!”

American consumers seem to agree. According to the August results from The Conference Board Consumer Confidence Index, consumer confidence is closing in on a new record high. The record of 144.7 set in May 2000 is just a chip shot away from the August 2018 reading of 133.4. Considering that the Consumer Confidence Index dates back to 1967 and that this is a widely watch data series, a new record high in this index would represent a significant achievement.

If we look at the employment picture, everything appears to be headed in the right direction as well. The Washington Post reported in May, one suspects a bit grudgingly, that The U.S. now has a record 6.6 million job openings.

According to the article by Heather Long, “The United States now has a job opening for every unemployed person in the country, a sign of just how far the nation has turned around from the recession that cost so many Americans their jobs nearly a decade ago.”

Signs of economic success are so abundant that, as CNBC reports, “[Former] President Barak Obama has entered credit-taking mode on the economy.”

Politicians aren’t the only ones talking victory laps either. Former Federal Reserve Chairman Ben Bernanke, Treasury Secretary Hank Paulson and New York Fed President Timothy Geithner – the principal architects of the 2008 bailout of the financial system – gathered earlier this month at a forum in Washington D.C. to justify their actions of ten years ago.

According to CNBC’s report, “We stepped in before the banks had collapsed and we did some things to fix the financial system which are very hard to explain because they are objectionable things,” Paulson said. “In the United States of America there’s a fundamental sense of fairness that the American people have. …You don’t want to reward the arsonist.”

“However,” the article continues, “they [Bernanke, Paulson, and Geithner] said doing nothing would have caused the economy to capsize. They acknowledged that some of the terms were distasteful, but they were necessary given the options at hand.”

In essence, the big three argued that they had to do evil that good might come, a line of thinking condemned in the Scriptures but one that is all too commonly used by vested political and financial interests in midst of financial crises to convince a wary the public to go along with their latest scheme to enrich themselves at the people’s expense.

Indeed the moderator of this forum was Andrew Ross Sorkin, who, as the CNBC article notes, wrote the 2010 book Too Big To Fail, The inside story of how Wall Street and Washington fought to save the financial system – and themselves. described as a chronicle of the 2008 crisis from the inside. I have not read this book, but the subtitle does, I think, let the cat out of the bag on the true motives of the bailout.

Unlike the unctuous self-justifications of JP Morgan’s CEO Jamie Dimon, who recently argued that JP Morgan’s actions during the financial crisis were done “to support our country and the financial system,” Sorkin’s subtitle at least admits the too big to fail meme was all about bankers and politicians saving themselves, not the country.

This is not to fault politicians and bankers for having a sense of self-preservation. The Scriptures tell us that no man ever yet hated his own flesh, and this certainly includes those who run the political and financial systems.

No. The fault of bankers and politicians is not in their having a sense of self-preservation, it’s that they lie and steal to get what they want.

In capitalism, in a free market economy, in a nation governed by the rule of law, there is no such thing as too big to fail. In capitalism, banks have a God given right to make money…and a God given right to lose it.

But in our decadent, late stage of empire society, dominated as it is by crony capitalists and their supporting cast of politicians, the Wall Street masters of the universe believe themselves entitled to never ending profits, while losses, well, those are for the little people to bear.

It is the opinion of this author that the intertwined political and financial systems of this country, rather than reflecting anything remotely like a Christian ethic, have become the embodiment of what Jesus talked about when he took his disciples to school for their arguing about who was the greatest.

According to Jesus, “The kings of the Gentiles exercise lordship [lord it over] them, and those who exercise authority over them are called ‘benefactors. ‘ ”

It would be impossible to find a better description of the words of Bernanke, Paulson, Geithner and Dimon than these. First, they conspired to rip off the American taxpayer by forcing machinations such as the Troubled Asset Relief Program (TARP) through Congress as well as the Federal Reserve’s Quantitative Easing (QE) program, about which the American people had no say at all, since it was decided upon by the Federal Reserve, an unelected body, paid for by private banking interests, that does not answer to the public.

TARP and QE were tools of a corrupt and inept financial and political elite, which they used to keep themselves ensconced in power at the expense of ordinary Americans. To put it another way, they lorded their power over the American people.

And, as if that weren’t bad enough, they then have the gall to turn around and act as if their actions were for the good of the country rather than for themselves. That is to say, they claim that, in the end, they’re really our “benefactors.”

And if you think the QE and TARP from 2008 is the end of the bailout road, think again. Wall Street Insiders reports that during the forum mentioned above, Tim Geithner, “called the effort to combat financial instability a ‘forever war.’ ” So we have more bailouts to look forward to. Strangely, this rhetoric is similar to what the advocates of the Global War on Terror say about their efforts, which today have proven largely ineffective.

Question, if your war on terror, financial instability or whatever has no end in sight, doesn’t that suggest you don’t know what you’re doing? Can anyone imagine George S. Patton saying such a thing? Just asking.

Enough of this nonsense!

It is the contention of this author that, contrary to all the self-congratulatory talk about how well the economy is doing, there are abundant signs that all is not well in the US economy. In fact, one could even argue that we’re in the midst of a slow-motion crash, but one that is concealed from public view by money printing, market manipulation and propaganda, what one market observer has called Management of Perspective Economics (MOPE).

Further, it is this author’s contention that, not only have the machinations of the political and financial elite not helped to bring stability to the financial system, they actually are the cause the current instability and all but guarantee a future crisis far bigger than the one in 2008.

Lord willing, it is my intention over the next few weeks to bring the light of Scripture to the 2008 financial crisis. It is my hope to take a look at what was done then, where we are now, and where we’re headed as a result of the decisions that have been made.


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Fed Speak: A Translation

Eccles Building

The Eccles Building in Washington D.C., home office of the Federal Reserve.

“We have a 2 percent symmetric inflation objective. For a number of years now, inflation has been running under 2 percent, and I consider it an important priority to make sure that inflation doesn’t chronically undershoot our 2 percent objective.” So said outgoing Federal Reserve chair Janet Yellen last week in the course of assessing her on the job performance over the past year.

According to her, everything else is pretty awesome. Unemployment’s down. The economy’s growing at a 3 percent clip. The stock market may be a little pricey but it’s really nothing to get too excited about.

Why, if it weren’t for that persistently low inflation, she’d be batting close to 1.000 and having an all around MVP year here in 2017.

What shall we say to all this? It seems to me that the first order of business is to translate Yellen’s inflation comments into plain English. Academics, politicians and others who wish to hide their meaning from the general public love to use obscure language. But one of the chief jobs of any Christian teacher, whether he’s a blogger or a preacher it makes no difference, is to penetrate the fog to permit a fruitful discussion.

That said, here’s my translation of Janet Yellen’s Fed Speak: “Our objective here at the Fed is to steal 2 percent of the value of the deplorables’ savings each year by creating credit a pace that is faster than the actual rate of growth of the economy. This, combined with our holding interest rates near 5,000 year lows to keep the rubes from earnings any interest in their savings accounts, represents a one-two punch to the middle class. By employing these policy tools, we enlightened folks here at the Fed can strip mine wealth from unsuspecting nobodies, who don’t deserve what they have anyway, and put it into more worthy hands, namely, those master of the universe types who own the banks and pay our salaries. Unfortunately, I was not as successful in this regard as I would like to have been.”

Now that’s more like it. We’re finally getting somewhere. No doubt, Janet Yellen would be greatly offended by my translation, as would pretty much any other central banker, mainstream economist, investor, or financial commentator. Perhaps some of the defenders central bank orthodoxy in academia, the press and in government really do honestly think that debt-based, central bank issued, fiat currencies actually serve the public interest. But that hardly gets them off the hook. They should know better, for the evidence is overwhelming that the current system – which is of, by and for the bankers – is a massive, and profoundly immoral, wealth transfer mechanism.

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Happy April Fool’s Day! And good April Fool that I am, I find myself hard at work once again to bring you my weekly blogging awesomeness.

Well, okay. Maybe awesomeness is a little too strong. I’ll settle for weekly blogging not-too-horribleness.

At any rate, I am kinda pumped about this week’s topic, namely the Federal Reserve. In short, I’m fed up with it.

But more than that, there are few things in life that bring joy to my heart more than the thought of dishing out a good beat down to ne’er do well boys and girls at the dear Federal Reserve.

I find it, how shall I say….cathartic. Yes, that’s it! Cathartic! And since it’s been a little while since I’ve dissed the Fed, I expect that it will prove all the more so.

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March MadnessAh, March madness, AKA man cave season. I had a boss once who always took off starting the Thursday of the first tournament game and spent his whole weekend binge watching college basketball. I’m guessing he probably wasn’t alone.

I’m not quite that hardcore, but I do love me a little college hoops too, especially when my Cincy Bearcats are playing well. Nice win tonight over K-State!

Of course, watching basketball has also manages to interfere with writing, which is why I getting a late start with this week’s TWIR, which is why this won’t get posted until Saturday. But hey, a man’s gotta do what a man’s gotta do.

On a more philosophical note, it seems to me that March Madness isn’t limited to the basketball court, but can be found in any number of places having nothing at all to do with Mr. Naismith’s invention. Take for example…

Monetary Madness

There are few, if any, examples of mass derangement to rival the hoopla surrounding a meeting of the Federal Reserve Open Market Committee (FOMC).

Eight times a year we’re treated to weeks of speculation about the FOMC’s upcoming decision, will they or will they not raise interest rates.

These meetings, as well as the Fed chairman’s semi-annual Humphrey-Hawkins testimony before Congress, are breathlessly reported on by the mainstream media.

To give you a sense of the absurdity of the coverage, back in the day when Alan Greenspan was in charge of the Fed, there were people who believed they could tell what would be done with interest rates based upon which hand “The Maestro” used to carry his briefcase.

We were treated to another such round of absurdity this past week as Janet Yellen, high priestess of the FOMC herself, sauntered forth from the bowels of Eccles Building to announce to the world her latest oracle: The economy’s awesome and we’re hiking interest rates.

All this was reported with the utmost seriousness by the mainstream financial press who dutifully played their roll as Fed echo chamber.

All, that is, except for one.

As Zero Hedge reports, Kathleen Hays of Bloomberg TV was perplexed at just how a supposedly data dependent Fed – the Fed is always talking about how their decisions on interest rates depend on economic data – could hike interest rates at a time when hard economic data is in a downward spiral.

The Bloomberg report’s pointed questions apparently both annoyed and frightened t he high priestess who never really answered the questions put to her.

And so it goes.

An even better question then why the Fed is choosing to raise interest rates into a deteriorating economy is why the Fed should have any say in interest rates at all.

Interest rates are the price of money, and as with the price of all other goods and services, interest rates ought to be set by the free market, not the monetary politburo called the FOMC.

There is no sound Biblical, constitutional, or economic argument for central banks, central bankers, or the fixing of interest rates by them.

But while sound reason based on Scripture leads to the rejection of central banking, the Marxists love it. In fact, the establishment of a central bank was one of the Ten Planks of the Communist Manifesto. There, Marx on Engels advocated for the, “Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.”

In the US, the central bank is called the Federal Reserve Bank, AKA “The Fed.”

That’s right. The button pushing boys and lever pulling girls in the Eccles building (that the Fed’s headquarters) are the dupes, slaves, and minions of one of history’s most destructive thinkers.

Actually, if you throw in the money printing madness inspired by one John Maynard Keynes, you can make that two of history’s most destructive thinkers.

Stop the monetary madness! End the Fed!

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rinkeby-riots

A policeman inspects a burned out vehicle following the riots in Rinkeby, Stockholm.

Some things seem to naturally go together. Peanut butter and jelly come to mind as a natural pairing. Baseball and summertime? I’m in. Even the terms “blowhard” and “politician” evoke a certain warmth of familiarity within me.

 

But riots and Sweden??!! Surely, you jest! Nevertheless, as they say, truth is stranger than fiction…

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